The £100,000 Personal Allowance Taper: How the 60% Rate Works
Reviewed against the official guidance linked in this article. Rates and eligibility can change. Check the linked official sources for your circumstances. See our editorial policy.
Understand the allowance taper, its regional limits and a £100,000 versus £110,000 pay comparison for 2026/27.
Above £100,000 of adjusted net income, your Personal Allowance falls by £1 for every £2 of extra income. It reaches zero at £125,140. For employment income in England, Wales and Northern Ireland, that can create an effective 60% marginal Income Tax rate in this range.
This is a marginal rate on an extra slice of income. It does not mean that 60% of your whole salary is taken in Income Tax, or that a pay rise by itself leaves you with less cash.
Why an extra £1 can create 60p of tax
Assume your income is in the taper range and your employment income is taxed at 40%:
- An extra £1 attracts 40p of Income Tax.
- The allowance falls by 50p.
- That newly taxable 50p attracts another 20p of tax.
The total is 60p. A typical employee also pays 2p of National Insurance on that extra £1, leaving 38p before any student loan deduction. Scotland has different rates: do not apply this 60% Income Tax explanation unchanged to Scottish employment income.
See the Personal Allowance taper and Scottish Income Tax rates.
Example: £100,000 versus £110,000
Assume 2026/27, England, Wales or Northern Ireland, a typical employee below State Pension age, no pension, no loans and no other income or adjustments. NI uses annual thresholds.
| Item | £100,000 salary | £110,000 salary |
|---|---|---|
| Personal Allowance | £12,570 | £7,570 |
| Taxable income | £87,430 | £102,430 |
| Income Tax | £27,432 | £33,432 |
| Employee NI | £4,010.60 | £4,210.60 |
| Take-home pay | £68,557.40 | £72,357.40 |
At £110,000, Income Tax is £7,540 on the first £37,700 of taxable income plus £25,892 on the remaining £64,730. The £10,000 pay rise therefore adds £3,800 of annual take-home pay under these assumptions.
These are annual estimates. Your tax code and cumulative payroll position can change the timing of deductions. Check 2026/27 payroll rates.
Adjusted net income is not always salary
Taxable savings interest, dividends, rental income and benefits can matter. Eligible gross pension contributions and Gift Aid can reduce adjusted net income. Check HMRC's definition before assuming your contract salary is the relevant figure.
For example, exchanging £10,000 of a £110,000 salary for an employer pension contribution can restore the full allowance where there is no other income or adjustment. In this scenario, Income Tax falls by £6,000 and employee NI by £200. Take-home falls by £3,800 while £10,000 goes into the pension, before any additional employer contribution.
That is a transfer from current cash to retirement savings. It does not put an extra £10,000 into your spending account. Ordinary eligible pension contributions can also reduce adjusted net income, but do not give the same NI saving as salary sacrifice.
Other thresholds need separate checks
The High Income Child Benefit Charge reaches its full amount by £80,000 adjusted net income, so it does not create an additional rising charge throughout the £100,000 taper range. Tax-Free Childcare has a separate £100,000 eligibility limit for either parent's expected adjusted net income, which can affect a household's overall position.
Check Child Benefit charge rules and Tax-Free Childcare eligibility. Our calculator does not model either scheme.
The standard pension annual allowance is £60,000, but employer contributions count and lower limits can apply. Check your allowance rather than assuming there is unused headroom.
Use the salary calculator to compare the employment-pay scenarios. See £100,000 after tax for the starting salary explanation.